Why time-to-business is far more important than time-to-market
According to conventional wisdom and most business strategy publications, "time-to-market" is a key success factor in a robust business plan. This belief is so strongly engrained in people's mind that it has become a standard key performance indicator for any project, should it be in a large corporation or a start-up.
Unfortunately the reality is, once again, pretty different from theory. In fact the "time-to-market" mantra is the cause of a number of failures, costing employees and shareholders vast sums of money and anguish.
WHAT'S WRONG WITH TIME-TO-MARKET?
The basic definition of time-to-market is: the time it takes to design and manufacture new products and push them out the door. This time lapse is naturally rather important: if it takes 12 months for Company A to get its goods on the shelves, whereas Company B achieves the same result in 6 weeks, this can be pretty lethal if you are operating in a sector like the fashion retail industry. The comparison between Marks & Spencer's and Zara's supply chain is thoroughly analysed in a INSEAD business case* and explains much of the pain suffered by M&S..
So time-to-market has become one of the standard performance metrics across all industries, providing managers and investors with an easy way to challenge a business plan. Unfortunately, like many other simple if not simplistic tools, what was initially a relevant KPI to be used with caution has now turned into an all-purpose metric. And business is like DIY: however good the tool may be, it can be dangerous if not properly used. Trust me, I've learnt it the hard way!
What fundamental issue does it miss? It forgets it is not because a product (hardware, software, service) is "on the shelves" in the physical or digital world that customers are going to line up to buy it repeatedly. This is probably one of the major learning process many start-ups have to go through: great idea >> super product >> smart value proposition >> miserable sales.
THE TIME-TO-BUSINESS EDGE
Unless you are running a fundamental research laboratory (and even so, you'll have to think about practical applications to justify your funding), you are at one point or another expecting to sell whatever product you have come up with.
The law of business economics states that it is customers who pay the employees' salaries, the bills, the taxes, the interest on the loans and - if there is any money left - the dividends to the shareholders. However obvious this may seem, companies of all size have been seen to forget that cash is king, and that it is very difficult to sustain a business without customers.
As a business angel and advisor to a number of start-ups, I meet leaders who are so passionate about their ideas that they overlook the sheer challenge of getting people - both in B2B and in B2C markets - to spend their money or their company's money to have access to their products. It can be especially true in B2B territories where the decision cycle of larger companies can be unbelievably slow for those who have never been through the hoops. And this can be even more complicated in markets where regulation plays a big role.
For established enterprises, the trap is even less obvious. As a going concern, a company risks over-estimating the traction for (new) products from (new) customers. When analysing a business unit, especially one which intends to venture into new areas and leverage growth relays, I always challenge the management team about their expectations concerning the speed at which sales will have to begin and ramp up to meet their Excom's commitment to the board of directors. These stress tests are often very useful to anticipate unforeseen risks throughout the commercial process.
The bottom line is that empirical evidence indicates that this time-lapse between time-to-market and time-to-business that is one of the primary causes for the failure of start-ups.
KEEPING THE CUSTOMER'S POINT OF VIEW
The best way to keep an eye on your time-to-business, i.e. getting people to pay for your product or service, is to remember who pays the bills : the customer.
When working with clients, I systematically take them through an exercise in which they experience the customer's point of view, how he/she sees the world, what is keeping him/her awake at night, what motivates his/her decisions and ultimately what would make this person choose to work with my client.
As this picture illustrate, perception is reality - especially in business !
While time-to-market is essentially an internally focused approach, time-to-business takes into account the whole value chain right through to the customer (a.k.a. consumer, buyer, citizen, patient, ...). It is more difficult, it raises more questions, it is more disturbing, but it is far more effective.
To successfully manage the time-to-business KPI, business leaders have to authorise themselves to switch position with their prospective customers and honestly perform a stress test of their ability to attract and retain them fast enough and in large enough flocks to achieve the business plan.
Photo by Eder Pozo Pérez and Peter Feghali on Unsplash
(*) Marks & Spencer and Zara: Process Competition in the Textile Apparel Industry Prize Winnerby Michael Pich, Ludo Van der Heyden, Nicolas Harlepublished: 07 Feb 2002